Cyberonics Says Former Employee Dismisses Suit
By Anna Prior
Cyberonics Inc. (CYBX) said a former employee voluntarily dismissed without prejudice a lawsuit he filed against the medical-device maker in a Massachusetts federal court.
The employee, former sales representative Andrew Hagerty, had previously filed a wrongful termination suit against the company in which he raised questions about the legality of Cyberonics sales and marketing practices.
The lawsuit had raised "the potential for this case broadening to something larger" like a qui tam, or "whistleblower" suit, Jefferies analyst Raj Denhoy said in a note to clients.
Shares of the medical-device maker recently rose 8.4% to $48.08.
While the employee's "motivation for dismissal of the wrongful termination suit is unknown, the move nonetheless removes a major overhang" on Cyberonics' stock, Mr. Denhoy said as he reiterated a buy rating on the stock.
In January, a short-seller's report discussed the lawsuit in its criticism of Cyberonics, sending shares tumbling on heavy volume.
The company responded to those allegations, declining to comment on the suit and disputing the short-seller's criticism of the company's implantable device used to treat epilepsy and depression.
On Monday, Cyberonics said that under the terms of Mr. Hagerty's employment, his claims are subject to binding arbitration and Mr. Hagerty has the right to re-file the lawsuit or to purse a resolution through binding arbitration.
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